Tag: Motley Fool Australia

Unfortunately, it looks as though interest rates are going to be staying at these ultra low levels for some time to come. In light of this, I continue to believe the share market is the best place to earn a passive income.

But which ASX dividend shares should you buy this week? Here are two dividend shares I would buy right now:

Dicker Data Ltd (ASX: DDR)

Dicker Data is Australia’s leading distributor of IT hardware, software, cloud, and Internet of Things solutions with over 5,500 reseller partners. Thanks to an increasing number of vendor agreements over recent years, it now distributes a wide suite of products from the world’s leading technology vendors. These include Cisco, Citrix, Dell Technologies, Hewlett Packard Enterprise, HP, Lenovo, and Microsoft.

Due to a combination of these vendor agreements and the growing demand for information technology products, Dicker Data has delivered consistently solid earnings and dividend growth over the last few years. Pleasingly, this strong form has continued during the pandemic as demand for IT and cloud products increases thanks partly to the work from home initiative. In light of this, management expects to increase its fully franked dividend by 31% to 35.5 cents per share in FY 2020. Based on the latest Dicker Data share price, this represents an attractive 4.75% dividend yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A second option for income investors to consider buying right now is an exchange traded fund. I think the Vanguard Australian Shares High Yield ETF is a great option due to its focus on high yield shares. The fund is invested in a total of 66 of them, which I believe provides some much-needed diversity. Something which has proved to be very important during the pandemic.

Among its holdings you will find the banks, BHP Group Ltd (ASX: BHP), and Telstra Corporation Ltd (ASX: TLS) to name just a few. Based on the current Vanguard Australian Shares High Yield ETF share price, I estimate that it offers a FY 2021 dividend yield somewhere in the region of 4% to 5%.

More reading

• Cash rate on hold until after 2022? Buy these ASX dividend shares
• 5 things to watch on the ASX 200 next week
• Ready for the “80% stock market crash”?
• 2 safe ASX dividend shares to buy in uncertain times
• The latest ASX 200 stocks downgraded by top brokers

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a positive week with a day in the red. The benchmark index fell 0.6% to 6,004.8 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to charge higher.

The ASX 200 looks set to start the week on a positive note. According to the latest SPI futures, the ASX 200 is poised to open the week 42 points or 0.7% higher on Monday. This is despite it being a reasonably subdued finish to the week on Wall Street. On Friday the Dow Jones rose 0.2%, the S&P 500 edged slightly higher, and the Nasdaq index fell 0.9%.

Oil prices sink lower.

Energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week in the red after oil prices pulled back. According to Bloomberg, on Friday night the WTI crude oil price fell 1.7% to US$41.22 a barrel and the Brent crude oil price dropped 1.5% to US$44.40 a barrel. Demand concerns weighed heavily on prices.

GPT half year result

The GPT Group (ASX: GPT) share price will be on watch when the real estate investment trust releases its half year result this morning. GPT owns a wide collection of properties including 12 retail centres such as Westfield Penrith and Melbourne Central. Investors will be interested to see what damage the pandemic has had on their valuations. According to CommSec, the market expects a profit of $264 million and an interim 11 cents per share dividend.

Gold price pulls back.

It could be a difficult start to the week for gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) on Monday. A rebound in the U.S. dollar put significant pressure on the gold price on Friday night. According to CNBC, the spot gold price fell 2% to US$2,028 an ounce.

IDP Education given buy rating.

Analysts at Goldman Sachs believe the IDP Education Ltd (ASX: IEL) share price can go a lot higher from here. The broker has put a buy rating and $17.00 price target on this student placement and language testing company. According to the note, Goldman acknowledges that near-term uncertainty is likely to persist, but it continues to see the longer-term structural growth profile of international education remaining robust.

More reading

• Does it ever make sense to access your super early?
• Is this the right time to be investing in the share market?
• 5 things to watch on the ASX 200 next week
• Why it’s a good time to buy and hold ASX shares
• These were the best performing ASX 200 shares last week

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One of the most successful investors in history is Berkshire Hathaway’s Warren Buffett.

At the last count the legendary investor had amassed a fortune of US$77.4 billion according to Forbes.

In order to get there, the “Oracle of Omaha” has invested wisely and with a long-term view.

While amassing a similar fortune may be difficult, I believe regular investors can still create significant wealth by following his investing principles.

Four key principles that Buffett follows are listed below. I’ve used these principles to see if A2 Milk Company Ltd (ASX: A2M) would be a share that he would invest in. Here’s what I found:

Buffett invests in companies that he can understand.

The a2 Milk Company is a premium branded fresh milk and infant nutrition company that is uniquely focused on products containing the a2 beta-casein protein type. Dairy products with just the a2 protein are believed to be easier to consume for those who experience challenges drinking conventional cows’ milk, which includes both a1 and a2 proteins. I think it is a very simple business to understand with clear drivers of demand. As a result, I think it gets a tick for this principle.

Buffett looks for companies with a durable competitive advantage.

Although the popularity of a2 Milk Company’s products has led to other dairy companies launching their own a2-only products, this hasn’t diminished demand from consumers. In fact, many believe that this has only strengthened its brand in the eyes of Chinese consumers. This is because the launch of a2 only products by big multinationals reinforces the a2 Milk Company’s premium brand in this key market. In light of this, I think its competitive advantage is here to stay.

Management must be talented and have integrity.

There has been a bit of upheaval at the company over the last 12 months, with former CEO Jayne Hrdlicka believed to have been forced out in December. Ms Hrdlicka “agreed to step down” from her role with immediate effect and was replaced with former CEO, Geoffrey Babidge. He replaced Hrdlicka on an interim basis while the board searches globally for a permanent replacement. While we don’t know who the next leader of a2 Milk Company will be, I’m confident it has the power to attract a high calibre executive to take it to the next level.

Don’t overpay for shares.

At present a2 Milk Company’s shares are changing hands at 34x estimated FY 2021. While this is not conventionally cheap, I feel its outlook justifies this premium. I believe a2 Milk Company has the potential to grow its earnings at an above-average rate for a number of years to come. This is thanks to the growing popularity of its infant formula in China, its modest market share in the lucrative market, and its expanding fresh milk footprint. Another positive is its hefty cash balance. I suspect this could be deployed for earnings accretive acquisitions in the near future.

Conclusion.

While Buffett may prefer to buy a2 Milk Company at a cheaper price, overall I think it is a share that he would approve of. I would class it as a strong buy for investors that are interested in making a long term investment.

More reading

• 3 top ASX growth shares you should never sell
• 3 ASX shares poised for huge growth over the next year
• 3 outstanding ASX shares to buy in August
• Where I would reinvest my Rio Tinto dividends
• Overvalued or a strong buy? Nextdc and 1 more ASX growth share to watch

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ResMed. Inc (ASX: RMD) share price was the worst performer on the ASX 200 last week.

The medical device company’s shares fell 11.4% over the period in response to the release of its full year results.

Is this a buying opportunity?

I think the pullback in the ResMed share price has created a buying opportunity for investors. Especially for those that are planning to make a long term investment, as I believe it has a very bright future ahead of it.

This is because ResMed has a focus on the lucrative sleep treatment and ventilator markets. It designs, develops, and manufactures masks to treat sleep disorders such as sleep apnoea. It also has a growing software business which provides solutions that support sufferers of sleep disorders.

On its investor call last week, management noted that there are 936 million people with sleep apnoea globally. There are also over 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma.

This gives it a massive addressable market to grow into over the next decade. So much so, management is aiming to improve a total of 250 million lives by 2025. This compares to the 16 million lives it improved in FY 2020 by providing them with a device or complete mask system to help them breathe.

Growing software business and R&D.

Another key attraction to the company for me is its software business. Management believes this business is a competitive advantage and it is hard to disagree.

At the end of FY 2020, ResMed’s digital health ecosystem had grown to over 12 million cloud connectable medical devices, with around 14 million patients enrolled in the AirView software solution. There are numerous benefits to this growing ecosystem, including recurring revenues and high levels of quality data. It is using this data to perform sophisticated analytics and drive actionable insights.

Pleasingly, management isn’t resting on its laurels and continues to invest heavily in research and development in an effort to cement its leadership position in the industry. It spent US$202 million on these activities in FY 2020 and intends to grow its investment in the double digits in FY 2021.

It notes that it has a full pipeline of innovative solutions that will generate both medium and long-term growth opportunities. It also has an industry-leading intellectual property portfolio of over 6,000 patents and designs.

Foolish Takeaway.

Given its strong position in the industry, its massive market opportunity, and its investments in research and development, I believe ResMed remains one of the best buy and hold options on the Australian share market.

More reading

• Top brokers name 3 ASX shares to sell next week
• These were the worst performing ASX 200 shares last week
• Ready for the “80% stock market crash”?
• The latest ASX 200 stocks downgraded by top brokers
• Is the ResMed share price a buy?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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According to the latest weekly economic update by Westpac Banking Corp (ASX: WBC), its team continue to believe the cash rate will remain on hold at the record low of 0.25% beyond 2022.

While this is great news for borrowers who will be able to benefit from low rates for some time to come, it is quite the opposite for income investors.

The good news is that there are plenty of dividend shares out there that offer generous dividend yields.

Two that I think would be great options for income investors are listed below. Here’s why I would buy them:

Rural Funds Group (ASX: RFF)

The first ASX dividend share to consider buying is Rural Funds. It is a leading agriculture-focused property company which owns a collection of high quality assets. These assets are leased to some of the biggest names in the industry such as Treasury Wine Estates Ltd (ASX: TWE). I’m a big fan of Rural Funds because of its long leases and the periodic rental increase included in them. This gives the company great visibility with its future earnings and ultimately its distributions. In FY 2021 it intends to grow its distribution by 4% to 11.28 cents per share. Based on the current Rural Funds share price, this equates to a very attractive 5.4% yield.

Telstra Corporation Ltd (ASX: TLS)

A second ASX dividend share to consider buying is Telstra. Times have been hard for the telco giant in recent years, but things are finally starting to improve. Due to its T22 strategy and the easing of the NBN headwind, I believe a return to growth is not far away. In the meantime, I’m confident that Telstra’s free cash flows will be sufficient to maintain its 16 cents per share fully franked dividend for the foreseeable future. This equates to a generous 4.75% dividend yield based on the latest Telstra share price. Though, it is worth noting that Telstra is due to release its full year results next week. So it may be prudent to wait for those before investing.

More reading

• 5 things to watch on the ASX 200 next week
• 2 ASX shares I plan to hold until I’m 100
• Ready for the “80% stock market crash”?
• The latest ASX 200 stocks downgraded by top brokers
• The best blue chip ASX shares to buy today

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think there are some top ASX growth shares that you should never sell.

There are some businesses that have long-term growth potential and are likely to be integral parts of our society for a very long time.

When you hold a quality business that offers important products or services then they’re more likely to deliver solid returns over the long-term. 

Here are three ideas:

Growth share 1: CSL Limited (ASX: CSL)

CSL is Australia’s biggest business, but I believe it still has plenty of growth potential for years to come.

If you don’t know what CSL does, it’s a biotech company that develops biotherapies and influenza vaccines. Its products are used around the world to treat immunodeficiencies, bleeding disorders, hereditary angioedema, alpha 1 antitrypsin deficiency and neurological disorders. It’s one of the biggest plasma collection businesses. These services are going to be important for a very long time – human biology isn’t likely to change much over time. The ASX growth share could continue to develop new treatments to diversify its earnings – it invests heavily in research and development.

At the moment it’s also involved in trying to find a healthcare treatment for COVID-19.

After many years of strong growth, CSL is predicting that FY20 profit will be between US$2.11 billion to US$2.17 billion – this would be growth of 10% to 13% compared to FY19. The company could continue to generate decent compound growth of its profit over the long-term, meaning the shareholder returns should also be pretty good for the long-term too.

It’s trading at 34x FY22’s estimated earnings at the current CSL share price.

Growth share 2: Altium Limited (ASX: ALU)

Altium is one of the most promising ASX growth shares in my opinion. It’s an electronic PCB software business that helps engineers design the items, devices and vehicles of the future.

The software business has quite sticky revenue. It would take a large amount of training to change to another software business. As long as Altium keeps giving its clients a good, regularly-updated product then I think it has a good chance of achieving its goal of becoming the clear global leader in its industry. It’s aiming for 100,000 Altium Designer subscribers by 2025. This will help it achieve US$500 million revenue by 2025. 

Its client base features many of the world’s most important technology businesses. Altium has effectively embedded itself into our society by providing its services to clients. Some of its most recognisable clients are: Amazon, Apple, Disney, Google, Boeing, Lockheed Martin, Tesla, Space X, NASA, Microsoft, Bosch, Honeywell and Fitbit.

The ASX growth share has plenty of attributes you’d want from a business. It’s debt free. It has a growing cash balance, it has a growing profit margin and Altium is increasing its market share. Altium has aligned and focused management. It has a global revenue base. It’s regularly growing its dividend.

Altium is an important business for helping the world’s development of new technology. At the current Altium share price it’s trading at 50x FY22’s estimated earnings and I think it could be a solid growth company over the next decade.

Growth share 3: A2 Milk Company Ltd (ASX: A2M)

A2 Milk has been a great ASX growth share over the past five years. I think that could continue as the business is steadily building its market share in China. It’s rapidly increasing its distribution footprint in the US. 

The infant formula and other dairy products that A2 Milk sells is important. We all need nutrition.

I think A2 Milk offers an attractive combination of defensive earnings and growth. For me, one of the most exciting aspects about A2 Milk is how many more countries that the company can expand into – it has a very long growth runway for this reason. It will soon be generating earnings in Canada after a licensing agreement with Agrifoods.

The ASX growth share has no debt and a large cash balance which could be used for shareholder returns or acquisitions.

At the current A2 Milk share price it’s trading at 29x FY22’s estimated earnings.

Foolish takeaway

I think each of these ASX growth shares have great long-term growth potential. I think A2 Milk could produce the strongest returns over the next five years as it’s priced the cheapest and has a lot of regions it can still grow in. I’d buy A2 Milk first for my portfolio. 

More reading

• Top brokers name 3 ASX shares to buy next week
• 3 core holdings for a $100,000 ASX portfolio
• 2 of the best ASX shares to buy right now
• 3 ASX shares poised for huge growth over the next year
• 3 outstanding ASX shares to buy in August

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Corporate Travel Management Ltd (ASX: CTD)

According to a note out of Morgans, its analysts have upgraded this corporate travel company’s shares to an add rating with a $12.85 price target. Morgans made the move partly on valuation grounds after a sizeable pullback in the Corporate Travel Management share price. It notes that this has left its shares trading at a big discount to its valuation. Another positive is its belief that corporate travel demand has been stronger than expected recently. This could mean it surprises to the upside in FY 2021. While I think Morgans makes some good points, I’m staying clear of the travel sector until the pandemic passes.

CSL Limited (ASX: CSL)

Analysts at UBS have retained their buy rating but cut the price target on this biotech giant’s shares to $320.00. According to the note, the broker has been looking at the performance of its competitors and notes positive results during the June quarter. And while the outlook on plasma collections remains tough, it is optimistic that other parts of the business will offset this weakness. As a result, it still expects earnings growth in FY 2021. I agree with UBS and would be a buyer of CSL’s shares.

Qantas Airways Limited (ASX: QAN)

Another note out of UBS reveals that its analysts have retained their buy rating and $4.60 price target on this airline operator’s shares. This follows the release of Virgin Australia’s business update last week. It sees the sweeping changes that Virgin Australia is making as a positive for Qantas and could lead to market share gains in the future. While I do think the Qantas share price is good value, there are too many uncertainties in the travel market right now to give me enough confidence to invest.

More reading

• 3 core holdings for a $100,000 ASX portfolio
• 2 of the best ASX shares to buy right now
• Ready for the “80% stock market crash”?
• Why I would buy and hold CSL shares today
• Is there a bull trap ahead for ASX shares like Webjet?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Early access to super is a hot topic right now as part of the Federal Government’s coronavirus response measures.

I’m a big supporter of the superannuation system and it’s easy to characterise early access of the scheme as a poor personal finance move.

However, are there any circumstances where accessing your retirement funds actually makes financial sense?

When could it make sense to access your super early?

The easy answer to that is never. I personally think that accessing your super early will make your retirement a lot more difficult.

Clearly, this will be contextual in personal circumstances. However, those in a strong financial position are probably not the same ones that need to access super early or even qualify.

But rather than dismiss the argument out of hand, let’s consider when it might make sense.

The first is when it really is a last resort. While it’s easy to consider investing in ASX shares, many Aussies don’t have a lot of cash to spare right now.

That means that early access to super could be the difference between paying the bills or falling short. Similarly, superannuation could be the key to paying down high-interest debts.

Credit card interest rates can be well in excess of 30% per year. That means accessing some super to reduce that debt could be a smart move.

Aside from absolute need, it could make sense when purchasing a property. Assuming you were eligible, the early access of super could be a good idea to help reduce borrowing costs such as Lenders Mortgage Insurance (LMI).

This is more likely to apply to those looking at the First Home Super Saver (FHSS) scheme. If the present value of the super impact is less than what LMI would cost, it may make sense to access your super early.

Foolish takeaway

Overall, these things are going to come down to individual circumstances. 

I think it’s pretty clear that accessing your super early just to spend it on new toys or just blowing the cash is not a good financial decision.

However, if the numbers stack up or there are no other options, using the available early access mechanisms could make sense. It’s worth making sure that you meet the eligibility criteria either under the COVID-19 scheme or the FHSS.

That said, I’m still a big believer in the super system and think it’s wise to use superannuation as a long-term tool for retirement.

I think if you are going to withdraw from your superannuation, consider the market timing. Withdrawing when the S&P/ASX 200 Index (ASX: XJO) is plummeting could be a bad idea.

That means not only are you not realising future gains, but your super is already lowly valued.

More reading

• Is this the right time to be investing in the share market?
• 5 things to watch on the ASX 200 next week
• Why it’s a good time to buy and hold ASX shares
• These were the best performing ASX 200 shares last week
• ASX 200 falls 0.6%, REA Group reports

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you are asking yourself if now is a good time to be investing in ASX shares, you are asking yourself the wrong question.

It’s understandable why would-be investors will be pondering this issue in this volatile COVID-19 environment and amid the unfolding reporting season.

But there are more important matters that newbies need to be focusing on instead of trying to time the market.

Timing the market vs. time in the market

The fact is, trying to time the market is usually a futile exercise. Experts often get this wrong, so what chances do amateurs have?

Further, lots of studies have shown that it isn’t timing but how long you remain invested that makes the biggest difference over the longer run.

As long as you can afford to put aside a regular amount every month, the time to invest is now!

But before you hit the “buy” button for the first time, you should at least have answers to the following questions.

What are my investment objectives?

Sounds like a basic enough question, but “making money” or “building wealth” aren’t the right answers.  Your objectives need to be more specific as it will influence how and where you invest.

The answer could be “to save for a deposit for a home in three years” or “provide for my retirement in 30 years”. The key here is to know what you are saving for and how long you have to achieve this.

The time component is critical. The longer you have to invest, the more risks you can take. This will help determine whether you should be more of a “growth” or “income” investor.

How much do I need to start investing?

It’s probably better to rephrase this common question to “how much do I need at the end?”. This gives you an idea of how much you need to start with, and how much extra you need to put in at regular intervals.

You can use the average compound annual growth rate (CAGR) of the S&P/ASX 200 Index (Index:^AXJO) as a benchmark. The 30-year CAGR is 8.9%, according to the Australian Financial Reivew.

But even if you don’t have enough to hit your target, you shouldn’t use that as an excuse not to save and invest for your future.

Having something is better than nothing and even if you can start with $1,000, it’s still worth doing. The only thing is that your investment strategy will have to suit your capital base. If you have only a small amount to invest, an ASX 200 ETF might be a better option than buying shares in one company only.  

Should I reinvest my dividends?

This is a question all investors should think about, including those buying “growth” stocks. Many larger cap growth stocks pay a dividend, albeit a modest one.

If you don’t need the dividends to cover your living expenses (and ideally you won’t), then the rule of thumb is to reinvest the dividends to benefit from the compounding effect.

Choosing stocks with a dividend reinvestment plan (DRP) would be the simplest solution for most retail investors. Just be aware that not all ASX stocks offer a DRP.

Happy investing fellow Fools!

More reading

• 5 things to watch on the ASX 200 next week
• Why it’s a good time to buy and hold ASX shares
• These were the best performing ASX 200 shares last week
• ASX 200 falls 0.6%, REA Group reports
• Why the Coca-Cola share price and these ASX stocks just got upgraded by brokers to “buy”

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Cochlear Limited (ASX: COH)

According to a note out of UBS, its analysts have retained their sell rating and $160.50 price target on this hearing solutions company’s shares. The broker expects Cochlear to report a sharp decline in profit in FY 2020 because of the pandemic. In addition to this, it appears concerned that FY 2021 could underwhelm as well due to rising coronavirus cases and the impact this may have on elective surgeries. And while it expects a rebound in unit sales once the pandemic passes, it doesn’t see enough value in its shares at this point to make any changes to its recommendation. The Cochlear share price ended the week at $189.14.

National Australia Bank Ltd (ASX: NAB)

A note out of the Macquarie equities desk reveals that its analysts have downgraded this banking giant’s shares to an underperform rating with a $17.50 price target. According to the note, the broker suspects that NAB’s overweight exposure to small businesses means it is at risk of being impacted more than most by loan deferrals. It fears this and the weak economic outlook could weigh on its short term earnings. The NAB share price last traded at $16.96.

ResMed Inc. (ASX: RMD)

Another note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating but lifted their price target on this sleep treatment company’s shares to $20.00. According to the note, ResMed delivered a stronger than expected fourth quarter and full year result last week. However, this was due to ventilator sales because of the pandemic, which offset softer than expected mask sales. Looking ahead, Macquarie believes its near term outlook is a little challenging and its growth is unlikely to justify the premium its shares trade at $25.06.

More reading

• 5 things to watch on the ASX 200 next week
• These were the worst performing ASX 200 shares last week
• 3 outstanding ASX shares to buy in August
• Ready for the “80% stock market crash”?
• The latest ASX 200 stocks downgraded by top brokers

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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